Build hope through economic development

Our impact through microfinance and more

1.3 billion people worldwide are living on less than $1.25 a day. When you’re that far behind, it’s hard to get ahead. That’s why we facilitate savings groups, improve market development, and provide access to microfinance, helping to break the cycle of poverty. These accomplishments represent some of our 2014 impact:

1,450,361

microloans disbursed in 34 countries

Achievement made possible in 2014 with the support of World Vision donors all around the world.

More than 1.5 million jobs

created or sustained through small loans

Achievement made possible in 2014 with the support of World Vision donors in the United States.

3,749,050

children impacted through loans and financial services to their households

Achievement made possible in 2014 with the support of World Vision donors all around the world.

Evaluations and Evidence

Value chain development methodologies have been used widely in enterprise and market development. For development organizations, value chain development tools have been helpful, but many of the tools have not been specifically designed to support or benefit very poor producers (farmers). To address this gap, World Vision and FHI 360 produced the “Integrating Very Poor Producers into Value Chains Field Guide” and trained frontline market facilitators on its use. See a summary video of the guide to the left, and download the field guide and accompanying pocket guide.

After publication of the field guide, World Vision facilitated workshops in Malawi and Ghana focused on use of the field guide, and implemented knowledge assessments immediately before and after each workshop, which both showed increased participant knowledge. However, formal training workshops do not necessarily lead to behavior change, so a follow-up survey on use of the field guide was sent two months post-workshop to determine if and how the field guide was being used. Results of the study were published in the June 2014 issue of the Enterprise Development and Microfinance Journal.

The AIDS crisis in sub-Saharan Africa has resulted in millions of children being orphaned or left vulnerable. The success and popularity of microfinance to alleviate poverty, empower individuals, and strengthen resilience has led to hopes that it might also be further used as a tool to mitigate the negative effects of the AIDS epidemic. This report analyzes the differences between microloan clients and non-clients who are caring for orphans and vulnerable children. Overall, microloan clients tended to eat more, send the children in the household to school, rely less on health assistance, and have children with stronger psychosocial well-being.

Our Approach

+ Where does economic development fit in the timeline of World Vision’s community work?

When we first partner with a community, we work to address the basic needs — like food, water, healthcare, and education. Then we can address more complex community needs, such as skill training, community-managed savings and loan groups, and microfinance to fuel the local economy.

We train those in need to grow their business, improve farming methods, and work together to form cooperatives. This helps parents become better providers for their children. And those children grow up better nourished, better educated, and better equipped to break the cycle of poverty.

+ What does economic development mean in the communities where you work?

We help communities solve economic problems by investing in their entrepreneurial spirit through microfinance, savings groups, and market/value chain development.

Microfinance provides individuals and groups with the opportunity to take out small loans to enable them to start or grow a business. These loans are $582 on average and are repaid at a rate of 95.5 percent. World Vision donors provide the capital for the loans, which are managed and dispersed through VisionFund International, a World Vision subsidiary. Once the loans are repaid, they are recycled back into the community.

Through savings groups, we train community members to save money on a regular basis. These groups of 15 to 25 members meet weekly to put money into a joint savings account, and they can take turns borrowing money.

Instead of farming just to feed their families, many subsistence farmers want to do more. They want to meet the demand for crops, livestock, or products in bigger and more distant markets. We train farmers to form producer groups, select suitable products, improve the value of their products, and negotiate for better prices.

+ How does World Vision work to break the poverty cycle in poor communities?

Breaking the poverty cycle is a complex, multi-sectoral process that varies greatly from country to country and community to community. However, a child’s parents have the greatest influence on their child’s economic well-being (EWB). Our strategy focuses on raising the EWB of individual households, helping to break the poverty cycle within that family and, consequently, the greater community.

Microfinance, savings groups, and market/value chain development are three ways World Vision empowers individuals to start their own businesses, learn savings habits, and improve their farming, which enables them to provide for their families. We also work with individuals to train them in business operation, gardening, and agriculture.

While breaking the poverty cycle does not rely entirely on families improving their EWB, the encouragement a family receives from having their own business and being self-sustaining is instrumental to transforming the lives of their children, other families in their community, and the community as a whole.

+ How does microfinance work?

Hardworking entrepreneurs, typically women with no credit history or collateral, apply for small loans to start or grow a business.

Donors choose an entrepreneur to fund.

The loan is managed and dispersed through World Vision’s microfinance subsidiary, VisionFund International.

The entrepreneur makes payments on the loan until it is repaid.

The repaid loan money recycles back into the community, funding more loans.

As the entrepreneur’s business grows, they are able to buy more food, medical care, clothing, and more — things that improve the well-being of their children and help grow their community’s economy.